Deutsche Bank thinks everyone should just settle down about Malcolm Turnbull for a bit

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There’s excitement in many quarters about Malcolm Turnbull becoming prime minister. Business leaders and investors are excited at the prospect of what the articulate and persuasive Turnbull might be able to achieve, and the fact that he has put the economy at the top of his agenda.

Certainly, Tony Abbott and Joe Hockey failed to create any compelling narrative for Australia’s place in the global economy, and how to position Australia for the future in an increasingly disrupted environment. Turnbull, immediately after announcing he was challenging for the leadership, said he wanted to restore business confidence and, after winning the vote, talked about disruption bringing new opportunities to Australia.

But it is early days, Joe Hockey is still treasurer as of this afternoon, and Deutsche Bank’s chief economist in Australia, Adam Boyton, thinks everyone should settle down for a bit.

In a note to clients, Boyton wrote:

Putting this another way, we would be surprised if an analyst has changed their forecasts for GDP growth this year, the cash rate, or the AUD, on account of [the change in leadership].

That said, in our view where a change in leadership could have an impact is in ending the low productivity, low growth mix we argued Australia had fallen into following the most recent set of national accounts.

Our use of the word ‘could’ in the paragraph above is deliberate.

A change in government (or Prime Minister) alone does not deliver the structural reforms necessary to end a low growth, low productivity mix. That will instead be the result of considered policy analysis and deliberation, the articulation of a case for reform, legislative success and good policy execution. Among other things.

These things do not, of course, happen overnight. Nonetheless they can occur.

Forming a judgement on whether they will occur – or to what extent – is likely, in our view, to take some time. There are a large number moving parts: indeed enough to leave us concluding that making ‘snap’ or 24 hour assessments will ultimately prove unwise.

Economists. They always spoil the fun.

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